Tuesday, 22 Mar 2022
Entrepreneurship may seem like the best way to control your finances and give wings to your creativity. However, it comes with its fair share of responsibilities. From administrative work to sales management and tracking the supply chain, there are myriad tasks waiting for the business owner every single day.
Thus, most of them hire professional bookkeepers in Melbourne to delegate the most crucial task to an expert. It frees up their time and helps them to keep track of every business transaction.
Besides recordkeeping, bookkeepers also manage several other tasks in a small business, such as payroll management. It is one of the vital activities as the satisfaction of the employees is dependent on it. Also, any miscalculation or delay in wages can lead to legal ramifications. Thus, here is everything you need to know about the payroll responsibilities of small business owners in Melbourne.
Payroll is the payment the employer makes to the employees (permanent, part-time, and contractual). Wages include salary, remuneration, commissions, allowances, bonuses, fringe benefits, employer’s superannuation contribution, the value of shares given to the employees, etc.
The total wages paid to the workforce are needed for bookkeeping to calculate payroll taxes. It is the tax that the Melbourne-based business must pay on the amount paid to the workforce every month if the total payment is above $58,333. The tax must be paid to the State Revenue Office Victoria.
Some of the wages do not incur payroll tax in Melbourne, such as primary and secondary caregiver leave, commonwealth paid paternal leave, the amount paid to workers who were absent from work because they volunteered as firefighters or in rescue missions during an emergency etc.
Every business operating in Melbourne which has a team of workers needs to register for payroll withholding (Pay As You Go) on the Australian Taxation Office (ATO) website. It can also be done while applying for the Australian Business Number (ABN).
PAYG is necessary if you have employees or agreements with contractual employees about withholding a certain amount from their payments. The amount that is withheld by the employer is calculated by the bookkeeper based on the information they declare in the tax file number.
PAYG is also needed if the business in Melbourne is making payments to entities that do not provide their ABN.
After registering, the bookkeeper will lodge business activity statements and PAYG withholding payment summary annual report to the ATO, and the business will make the payment. A summary of the payments must be provided to the employees as well.
Before paying the workforce, the employer and the bookkeeper need to work on several aspects of making the payment possible. It is necessary to follow a step-by-step process to avoid any pitfalls.
Besides hiring a competent bookkeeper, the business owner in Melbourne needs to rely on technology to automate the time-consuming tasks and reduce the workload. It enhances productivity and reduces the risk of errors and miscalculations.
A payroll management software proves beneficial in organising the payroll data and ensuring compliance with Single Touch Payroll for lodging reports with the ATO in Melbourne. The software sends the payroll information automatically every time the employer pays the wages.
The employer must collect all the required information from the employees, including name, address, tax file number, the date of joining, and details of the bank account for crediting the salary. It must include a breakup of the wages, such as gross salary, allowances, fringe benefits, etc.
Make sure that you pay your employees monthly if you have registered for a monthly payment with the State Revenue Office. Use the business bank account for paying wages. You can create a separate account for salary payments in Melbourne as it will help you distinguish between wages and other business expenses during the tax season.
The bookkeeper must make sure that the salary of the business owner is included in the payroll. Also, the employees must be provided with payslips that must include details about the salary breakup, taxes, and superannuation.
Bookkeepers are proficient in reconciling bank accounts because it ensures that the amount of money going out of the business account matches the money spent by the company.
It helps in identifying any errors in calculations and reconciling total gross wages to wages expense. They must reconcile payroll tax every month and remaining superannuation liability to not paid superannuation for a defined period.
The PAYG withheld by the employer in Melbourne must be reconciled with the paid PAYG or the future PAYG payments. It helps in making sure the books are accurate and up to date.
The bookkeeping companies always reconcile unpaid PAYG to PAYG liability and the balance sheet. Also, the monthly and annual paid PAYG must be matched with the payroll appropriate summaries.
Business owners must be on the top of payroll management to ensure that the employees are paid accurately and on time. Thus, most of them hire experienced bookkeepers in Melbourne to get the job done without any hassles. It is the perfect way to comply with state regulations.